Qatar's sovereign wealth fund has made a dramatic £1.7bn swoop on Xstrata,
buying 5pc of its shares ahead of the mining group's planned £50bn merger
with Glencore.

The move, which has angered some of Xstrata's shareholders, sees Qatar overtake Standard Life and Legal & General to become the third biggest investor after Glencore (33.6pc) and Blackrock (5.43pc).

Aside from Blackrock, most other top 10 investors have been critical of the merger deal and the terms that Xstrata has agreed. However, Qatar's intervention, via its QIA vehicle, is expected to deliver crucial support to Glencore ahead of a planned shareholder vote in the summer.

"It makes us feel very uneasy to see the appearance of this sovereign wealth fund on the shareholder register. It almost certainly means votes are in the bag for Ivan [Glasenberg]," said Schroders fund manager, Richard Buxton.

Other fund managers, who asked not to be named, said they were concerned this was some kind of "stitch-up" that would push the deal through despite widely unpopular terms. "Under the current structure we will vote the deal down and we won't be alone," said one top 10 holder in Xstrata.

Xstrata and Glencore will be launching a joint charm offensive after Easter, with Xstrata boss Mick Davis and Ivan Glesengerg of Glencore teaming up for the first time in an effort to win over shareholders. "It won't make a blind bit of difference to the fact that Xstrata is being sold far too cheaply and that the exchange ratio is wrong," said a top five investor.

Under the terms of the so called merger of equals, Xstrata shareholders will get 2.8 Glencore shares for every one share they own. But many Xstrata owners want 3.6 Glencore shares and say the current deal does not reflect the long term earnings potential of the miner versus the volatility of the commodities trader.

"In the absence of a control premium, this roadshow is all about convincing us that there is equality in the management structure," said another shareholder. "But they still have lots of work to do to prove this deal is a good idea for Xstrata investors – and that means changing the ratio."

One insider said it was difficult to alter the deal terms at this stage because it would look like such a "monumental climb-down,". However, shareholders said changes were possible as long as it was clear that the deal would stall in its current format.

"Glenstrata might well be a better company once merged, but the terms of that merger have never looked quite right," said another leading shareholder. Investors also said they were keen to get plans for Mr Davis' remuneration package in the new company, which some say could be a "moral hazard" if set too high.

Blackrock, which has a close relationship with Glencore, has faced criticism for its support of the merger. Catherine Raw, who co-manages BlackRock's $14bn (£9bn) World Mining Fund, said she supported the bid to join the two FTSE 100 companies. However, the Blackrock holding is also held by a series of passive funds that track the index, which Ms raw claimed could vote differently.

In many cases index managers abstain from takeover votes because their job is to be neutral and perform in-line with the index. But insiders say almost all of Blackrock's holding will be put to work alongside the active managers. The world's biggest investor does not publish the voting history of its passive funds and therefore keeps secret the influence those funds exert.

Xstrata's fourth biggest investor Legal & General has 2.8pc, which is also mostly held through passive funds.